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Depreciation charges dim Gem Diamonds' sparkle

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Date: Friday 29 Aug 2008

LONDON (ShareCast) - Soaring diamond prices helped miner Gem Diamonds more than double revenue in the first half of 2008.

Revenue surged to $166.8m from $69.8m in the first half of 2007, while earnings before interest, tax, depreciation and amortisation jumped 68% to $56.5m.

Profit before tax slipped to $23.9m from $28.6m a year earlier, reflecting sharp increases in depreciation and amortisation, with the former rising to $16.4m from $2.1m and the latter advancing to $14m from $4.7m.

Diamond inventory at the end of June fell in value from the year-end figure to $13.5m. Cash resources declined to $143.6m from $182m at the beginning of the period, reflecting heavy investment of $44m in property, plant and equipment at existing operations and a further $15m on exploration and resource development expenditure in the DRC, CAR and Botswana.

“The remainder of the year will see the group focus on increasing production from its three operating mines as well as the development of projects set to generate future revenue streams,” said Clifford Elphick, chief executive officer of Gem.

No dividend has been recommended.

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